German consumer confidence has risen slightly but a sustained recovery is still some way off, a widely-watched survey by the GfK institute shows today.
The institute's index estimate for July rose to 2.9 points from a revised 2.6 points in June, a statement said. Analysts had forecast the July estimate would come in at 2.5 points in Europe's biggest economy.
GfK's survey of around 2,000 consumers measures overall sentiment, with sub-indices covering personal income expectations, views of the economy in general and the propensity to make major purchases.
Hopes for a stabilisation of the economic downturn gained ground among consumers in the past month, the institute said.
However, the main reading was still at a low level and questions remained as to whether Germany was really at the start of a sustained rise in confidence, it added.
Unemployment, which is clearly on the rise, would be the deciding factor, GfK said.
Germany has managed to keep job losses to a minimum through the use of government-subsidised shorter working hours but companies are near the point where they might begin to lay off workers, something which often occurs towards the end of economic downturns.
Germany's economy contracted by a huge 3.8% in the first quarter of 2009 and is forecast to shrink 6% this year, which would be its biggest slump since 1945.
